Athenex, Inc. (ATNX) on Q4 2021 Results - Earnings Call Transcript
Operator: Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2021 Athenex Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to Caileigh Dougherty, Director of Investor Relations. You may begin.
Caileigh Dougherty: Good afternoon, and thank you for joining our conference call. Today, we will provide an update on Athenex's business, as well as a review of financial results for the fourth quarter and full-year 2021. The news release detailing the results crossed the wire earlier today and is available on the company's website. A replay of this call will also be archived on the company website. During the conference call, the company will make projections or forward-looking statements regarding future events, including statements about financial, business, and clinical milestones anticipated in fiscal year 2022 and beyond. We encourage you to review the company's past and future filings with the SEC, which identifies specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements. You can find our SEC filings in the EDGAR database at www.sec.gov, or in the Investor Relations section of our website at www. athenex.com. Today, we are joined by Dr. Johnson Lau, Chief Executive Officer, Dr. Dan Lang, President of Athenex Cell Therapy, Dr. Kurt Gunter, Chief Medical Officer of Cell Therapy, Mr. Jeff Yordon, Chief Operating Officer, and Mr. Joe Annoni, Chief Financial Officer. The management team will be available to answer questions after the prepared remarks. I will now turn the call over to Johnson for introductory comments.
Johnson Lau: Thank you, Caileigh Dougherty. And thank you everyone joining our conference call this afternoon. I'm excited to what you thought the implications of the announcement we make this morning, regarding the strategic pivot of the company and several financial initiatives we have already begun implementing. We make this decision to focus on our cell therapy platform, because we believe it has the best in class potential, and therefore deserves to be the highest priority for our experienced leadership team. We're also working on a strengthened balance sheet, keep cash runway, to allow us to meet our objectives to increase shareholder value and bring innovative treatments to cancer patients. I want to highlight these three key elements of this plan. First, we are refocusing our therapeutic development efforts on our Cell Therapy Programs. Second, we will discontinue most of our R&D initiatives around our Orascovery. Third, we are strengthening our balance sheet by monetizing non-core assets. We are also implementing significant cost-saving programs to re-prioritize the company to focus on cell therapy. Our management team and board, conducted an extensive review of our operations and pipeline, and it's clear to us that the best opportunity to create significant long-term value, is by focusing on cell therapy. We see our cell therapy technology, it's differentiated and believe it has the potential to be highly competitive and potentially disruptive to recurrent cell therapy landscape. Specifically, we think it can address, some of the challenges facing the existing cancer treatments. And the early clinical data from our candidates have been very promising. Doctors Dan Lang, and Kurt Gunter. will provide more details in a few minutes on our strategic plan to build upon our foundational cell therapy progress to create a leading franchise. The Orascovery programs, serve as the main focus of a clinical development effects, up until 2021. We announced previously, that we would not be pursuing a metastatic breast cancer invitation in the U.S. after receiving a complete response letter from U.S. FDA. We are now taking this a further step, and have decided to discontinue other oral programs in combination with encequidar. The only 2 ongoing oral paclitaxel trials that could potentially unlock value that will both can continue, is a very little, limited, investment required by Athenex. The first of these is the I-SPY 2 trial, which has an expected readout in the second half of 2022. We call that the quantum leap. Healthcare collaborative has been using our drug in two of its study arms in combination with dostarlimab in breast cancer patients in the neoadjuvant setting. This is a randomized Phase 2 trial that could advance into Phase 3 and beyond if results are encouraging. And it's an area of value that could be unlocked. This program requires minimum future resources from Athenex, but we hope that this data results to additional value for our shareholders. We are also pleased to announce that we have initiated expansion portion of the Phase 1/2 clinical trial of oral paclitaxel in combination with pembrolizumab in patients with Non-Small Cell Lung Cancer. This comes after reporting highly encouraging data of four partial responders and four stable diseases in eight evaluable patients at ESMO last fall. We will continue to monitor the progress of both these studies, and will look for opportunities to extract further value from this asset through potential partnerships or other means. As a reminder, the UK Medicines and Healthcare Products Regulatory Agency validated our market of privatization application for all paclitaxel for the treatment of advanced breast cancer. And we look forward to updating you on the regulatory process in the coming months. Moving onto our balance sheet. Last quarter, we pursued various initiatives to unlock long-term value. And we have so far raised a total of $40 million in the first quarter. This process will be useful towards debt pay down, as well as providing operating cash to support our R&D programs in cell therapy. We recently completed the sale of our manufacturing facility in Dunkirk, New York, to ImmunityBio on February 14. We're pleased with how quickly we were able to close this transaction, having entered discussions with ImmunityBio late in 2021, and announced the agreement in early January this year. Mr. Jeff Yordon will provide more details on the implications of this sale in a few minutes. There are several components of our business, unrelated to cell therapy, that we now consider non-call. We're in the process of carrying our actions, they will unlock value from these assets, as we did with Dunkirk. We look forward to updating you on those activities in the coming months. A critical component in the organizational changes within Athenex is an aggressive cost cut saving programs, which unfortunately, we put a reduction in headcount. We have also identified additional means of cutting causes. An implementation of this plan is expected to reduce operating expenses by over 50%. Altogether, we're divesting non-core assets in cost reduction progress. We plan to extend cash runway to beyond 18 months. We believe the combination of initiatives I have outlined has the potential to unlock value for our shareholders. Finally, Mr. Joe Annoni, who was recently appointed our new CFO, is joining us on the call today. Joe brings over 20 years of experience, setting with it in big for our advisory, investment banking, and private equity. He has expertise in developing and implementing strategic changes within complex environments, which will be extremely variable to us as we prioritize our programs. I'll now turn the call over to Dr. Dan Lang to discuss our Cell Therapy programs.
Dan Lang: Thank you, Johnson. As we refine our mission at Athenex, we will remain a science driven company, focused on identifying and developing innovative treatments for cancer patients. We believe cell therapy is a promising technology with the potential to change cancer into a treatable chronic disease, particularly in hematologic malignancies. We are excited to focus our R&D efforts on NKT cell based technology, that we believe has shown the potential to address several unmet medical needs faced by healthcare systems, physicians, and patients, with the currently marketed CAR-T therapies. We aspire to solve some of the existing bottlenecks and limitations, and bringing value to the different constituents in the healthcare ecosystem. There are 3 current challenges for the current CAR-T treatments; access, costs, and clinical outcome. Given the unique features of our technology, I believe we can meet each of these challenges. First, due to the difficult and specialized handling of patient-specific products, current CAR-T therapies are primarily reserved for transplant centers, as the community hospitals are, in large part, not set up to use these technologies. This is the reason why it's estimated that only 25% of the eligible patients are currently treated with CAR T therapies. Our providing an allogeneic off-the-shelf product that can be given in an outpatient setting. We expect to broaden access to cell therapy by penetrated in the community hospital network with our NKT solutions. By driving deeper adoption of our therapies, we can ultimately benefit more patients than those addressed by current marketed CAR T's. Second, current CAR T therapies costs between $300,000 to $400,000 per dose. More importantly, we're getting the feedback that it costs, academic hospitals even more to take care of these patients because of the prolonged ICU and hospital stays. One highly regarded thought leader recently commented to us that this business model simply does not work for the healthcare system. In contrast, we hope to leverage our ability to manufacture several 100 doses from a healthy donor to create a economies of scale. That would reduce costs within the healthcare system and for payers. With an outpatient base and well-tolerated treatments with strapped to lower than burden and the costs of taking care of these patients. Lastly, despite the promising clinical performance from current CAR NKT therapies, there is still a lot of room for improved efficacy. Up to 60% of relapsed refractory lymphoma patients, don't derive more interim-driven response from CAR T2, as described by Dr. Gil Blum at our KOL webinar in December. In addition, 30% to 40% of patients experience the dreaded cytokine with lead syndrome complications. With the 80% response rate seen at the lowest doses, with our CD19 CAR NKT therapy, we believe there are levers we can pull, such as higher doses and repeat dosing, that can drive deeper and more durable responses for a larger percent of patients. Our , well-tolerated with a CRS rate that is much lower than the current CAR T therapies. In summary, we believe our NKT cell based treatments, could solve some of the problems faced by commissions and patients. Using the current structurenation CAR T treatments. As the field of cell therapy continues to evolve, we are focused on collaborating with all stakeholders, including patients, physicians, healthcare systems, and payers, to extend and improve the quality of life for cancer patients. Now, let me turn it over to Kurt to provide an update on our clinical programs.
Kurt Gunter: Thank you, Dan. Good day. My name is Kurt Gunter and I am the Chief Medical Officer for cell therapy at Athenex. I have extensive experience in the field of cell therapy, and was previously CMO at Cure Therapeutics. I joined Athenex at the time of our acquisition of Cure. And I'm pleased with the progress of our CAR NKT cell programs since the acquisition. I want to highlight some of the unique characteristics of NKT cells, which we believe, combine the best features of NK and T-cells. Importantly, type 1 NKT cells, which we work with, have a unique invariant T-cell receptor or TCR. Because of this invariant TCR, there is virtually no risk of graft versus host disease, compared to allogeneic T-cells. CAR NKT cells have strong cytolytic activity, and can kill tumor cells directly and indirectly. These cells are known to have good memory and persistence, characteristics not shared by NK cells. NKT cells home to tissues and tumors, and we have data demonstrating that CAR NKT cells are superior to CAR T-cells in tumor homing. For these reasons, we believe this is the ideal cell type to treat solid tumors, and our early data support the promise that CAR NKT cell holds in the treatment of cancers. I'm extremely pleased to report continued progress in advancing our key cell therapy platform over the past quarter. Data from our Phase 1 anchor trial of KUR -502, our allogeneic CD19 directed CAR NKT cell candidate, were reported at ASH in December. We saw strong efficacy and an excellent tolerability in a population of heavily pre -treated, relapsed, refractory leukemia and lymphoma patients. Specifically, out of five evaluable patients, there were three complete responses and one partial response for an overall response rate of 80% and a complete response rate of 60%. Notably, two of the responders a failed prior autologous Car-T. And we are seeing results at very low dose levels. In this trial, we also observed that CAR NKT cells home to sites of disease and expand in the peripheral blood. These results are extremely encouraging and suggests a promising platform for off-the-shelf immunotherapy. Further enrollment in the ANCHOR trial continues and we are working to enroll additional patients at higher dose levels. As we look to the remainder of 2022, we are excited about several important events and presentations. Our IND application, expanding the ANCHOR study to up to 12 clinical sites, was recently allowed to proceed by the FDA. This should markedly accelerate enrollment from that achieved with the current single-center. Additional data from this program are expected to be reported at ASH in December, including updates from patients at dose levels 2 and 3, as we look to establish the recommended Phase 2 dose. We will also present more data from a responder analysis of KUR -501 or autologous GD2 CAR NKT cell program in pediatric neuroblastoma at the ASGCT conference in May. We plan to present pre -clinical data from our allogeneic GPC3 CAR NKT cell program in liver cancer at the ASCO conference in June, and file an IND for this program in the first half of 2023. Finally, for our earliest stage program of allogeneic NKT cells expressing T-cell receptors for solid tumors, we expect to have clinical candidates defined by the second half of 2022. I will now turn the call over to Jeff Yordon.
Jeff Yordon: Thank you, Kurt. As Johnson mentioned earlier, we recently completed the sale of our manufacturing facility in Dunkirk to ImmunityBio for $40 million. As part of this sale, we entered into an exclusive contract with ImmunityBio to manufacture our 503B products at this facility in the eight new pods we developed there. The advantage of this arrangement, in addition to the cash generated from the sale, is that we can now reduce our overheads significantly and still increase our capacity four fold with a very low cost of goods, which should have a positive impact on the margins of this business. This sale represents part of the new strategy of the company, unlocking value as we pivot, which you can expect to continue throughout the year. Moving to our EPS in APD specially pharma business, sales for the fourth quarter and full-year 2021 were $23.5 million and $92.3 million respectively, compared with $21.8 million and $105.3 million for the fourth quarter in full-year 2020. There were several factors that influenced performance in 2021. The 2020 revenues included approximately $21 million in non-reoccurring international sales, due to COVID. Representing a baseline figure for 2020, of $84.3 million. Adjusting for these one-time sales in 2020, revenue for 2021, grew by $8 million to $92.3 million. Most of the issues relating to the COVID pandemic, including the manufacturing slowdowns in China and India, inability to secure shipping options to bring inventory into the U.S. shortage of essential materials, and challenges to purchase and receive essential APIs for our products, have largely been resolved. And we are in a much better position to grow the business in 2022. We launched 2 products in the fourth quarter, and we have an additional 10 planned for 2022. Two of the planned new introductions are very significant products, and these will be launched at market formation, meaning right at the time of patent expires. The revenues on these two products will increase revenues and margins of the overall business significantly. Both products already have tentative approvals, which means we will be able to launch them when the patent expires. We previously announced a delay in securing state licenses for the Dunkirk facility. We're currently collaborating with ImmunityBio to secure licensing in New York in order to begin operations there. And then with the seven largest states, we currently do business with. It will likely be late 2022 or early 2023 before this process is complete. But once the licenses are in place, this sets us up for significant further growth, 2023 and beyond. Athenex Pharmaceutical Division currently markets 29 products with 54 skews and Athenex Pharma Solution markets five products and 16 skews. Overall, we are very excited by the potential of this business to generate significant value. The revenues at APS and APD are robust, and we are selling every unit we can manufacture at substantial margins. We see the consolidated business returning to growth in 2022 and are now forecasting that revenues will increase by between 15% and 20%. Further product launches by APS and the receipt of licenses to ship 503B products are expected to result in substantial growth further in 2023. I will now turn the call over to Joe Annoni to discuss the financials.
Joe Annoni: Thank you, Jeff. Good afternoon, everyone. I am honored to join this team of innovative leaders in the world of cancer research and development. Athenex's mission to improve the lives of cancer patients resonated with me personally, as I'm sure does with many of you listening. I came onboard to apply my transactional and operational experience to drive strategic financial changes so that Athenex will be in a better position to deliver on that goal. Our announcements today mark an important time to change. A time to break down, and a time to build back up our foundational strengths, as we focus on the future of our Cell Therapy programs. In order to do that we see 2 significant opportunities to strengthen our balance sheet. First, the monetization of non-core assets, and second, cost reduction. As you heard today, we have already begun addressing both. The asset monetization steps we have implemented so far, include the sale of our Dunkirk facility, which generated $40 million along with significant overhead cost savings. We have identified other non-core assets in the business that could search and unlock additional value, and we will provide updates on these programs as we continue to execute on our strategy. Our cost reduction initiatives are related to the streamlining of the company's structure to refocus it around Cell Therapy. The sale of Dunkirk alone reduced our headcount immediately by 70 people and we eliminated the associated operating and capital expenses. Our plan also includes the winding down of non-core operations and manufacturing. Small molecule R&D and supporting infrastructure. Small molecule clinical study expenses are being reduced by over 90% as we now only have two ongoing studies. Additional cost reduction initiatives shall allow us to reduce total operating expenses by over 50% and by transitioning to a pure-play biotech model, we can minimize future capital expenses. The process of strengthening our balance sheet is underway and the team has committed to taking necessary steps to ensure a strong financial foundation for the future of Athenex. Combining the activities that we have executed on, as well as planned actions and the divestiture of non-core assets and cost reductions, we expect to extend our cash run-rate for 18 months and beyond. In summary, we aim to succeed and realizing the full potential of our Cell Therapy platform while transitioning to a focus business model that has an appropriately sized infrastructure. Now, turning briefly to the fourth quarter and full-year 2021. I would ask that you please refer to our press release that was issued earlier today for a full summary of our financial results. But I will highlight the following: Total revenues for the fourth quarter and full-year 2021, were $24.9 million and $120.2 million respectively, compared to $21.8 million and $144.4 million respectively for the same periods in 2020. R&D expenses totaled $18.3 million for the fourth quarter in line with the prior-year period, and R&D expenses totaled $80.2 million for the full-year 2021, an increase of 6% year-over-year. SG&A expenses totaled $12.9 million and $72.1 million for the fourth quarter and full-year 2021 respectively. This represents a year-over-year decrease of 59% and 26% respectively. Net losses attributable to Athenex for the fourth quarter and full-year 2021 were a $104.4 million and $199.8 million respectively, for losses of $0.95 and $1.92 per diluted share, respectively. The fourth quarter and full-year results include non-cash goodwill impairments of $67.7 million. As of December 31st, 2021, we had long-term debt of a $150.3 million under our Senior Credit Agreement with Oaktree and Sagard, which we have begun to pay down with the proceeds from our asset monetization activities. As of December 31st, 2021, Athenex had cash, cash equivalents, and restricted cash, of $51.7 million, and short-term investments of $10.2 million. Finally, as Jeff mentioned, the specialty Pharma business is expected to return to growth this year. Given the visibility we have on-demand and on new launches, we are issuing product sales guidance for the fiscal year 2022, at 15% to 20% growth over the prior year. I will now turn the call back to Johnson.
Johnson Lau: Thank you, Joe. We have outlined our strategic plan and emphasized our priorities for year-to-date. As you can see, we have already taken steps to pivot Athenex towards our new future in therapy. And this is just the beginning. We're intensely focused on advancing this promising pipeline. And our actions will ensure this simplified company will reflect our focus, and position us for success. I want to take a moment to thank all of our colleagues who work endlessly on the Orascovery programs in other parts of the business we're no longer supporting. I am grateful for the dedication and contribution the team has made over the past several years. We'll miss all individual team members who will be departing and wish them luck on their future endeavors. We'll now open the call for questions. Operator?
Operator: Thank you. We will now be conducting a question-and-answer session. . One moment, please, while we poll for questions. Thank you. Our first question is from Jonathan Miller with Evercore ISI. Please proceed with your question.
Jonathan Miller: Hey, guys. Thanks so much for taking my question. I'm very excited to hear about the pivot here and all of your plans for cash runway extension. I just want to be super clear about the plans for oral Paclitaxel at this point though. If you get positive approval in the positive opinion in the UK, will you intend to commercialize there? And if I-SPY 2 looks good in the second half, will you pursue a registrational path there? So at this point, what role does oral Paclitaxel play as part of your monetization of non-core assets. And then while we're on that topic, when we have a more concrete sense of cash runway and the -- what's your expected cadence, I guess, of the monetization, unwinding of the non-core or legacy businesses?
Johnson Lau: Thank you for your question, Jonathan. Certainly. I mean, there's still value in the Orascovery program. In particularly, oral paclitaxel. And right now, we have to -- we understand the challenges that we're facing will be resources that we have. Cell Therapy is definitely the priority right now, given the exciting data we generated and the potential return for the investors. It was a tough decision. But anyway, if the data cannot be possible with I-SPY 2, or with a positive development with the UK MHRA, obviously, we intend to continue accepting the value from this program and we will be able to update, with regard to our plan, in case we -- something we're positive, which we're hoping for in UK, or if we're -- we have positive data from the I-SPY 2 program. Certainly, when positive things develop, we have already demonstrated that we know how to react, and there could be strategic actions that we could take in order to realize the value for these asset for our shareholders.
Operator: Jonathan?
Jonathan Miller: Yes. Thank you. And on the concrete sense of cash runway cadence to monetization question?
Johnson Lau: On that question, I would like to emphasize that we -- when we were trying to build for success, we built the vertical integration with regard to having supply chain and then, because of that, we then also was able to realize -- create some value based on the specialty pharma business. But now that we are focusing on Cell Therapy, the non-core and some of the components become non-core assets. And the good part is that some of these non-core assets, they do have a lot of value. We already indicated that we are in the process of monetizing them, and we have done a lot of work on that. And so we hope that we're going to per watt in updates once this process are in completion, and hopefully, in the next few months. And with that, we believe that that will be able to extend the cash run-ratio 18 months or longer.
Jonathan Miller: Okay. Excellent. Thank you very much.
Johnson Lau: Thank you, Jonathan.
Operator: Thank you. Our next question comes from Kevin DeGeeter with Oppenheimer. Please proceed with your question.
Kevin DeGeeter: Hey. Appreciate the update. With regard to the data to be presented at ASGCT, how should we think about number of patients and maturity of that update and maybe on a related point with regard to the ASCO presentation? Any sense to help think about expectations there as well?
Johnson Lau: Kurt?
Kurt Gunter: Okay. Thank you for your question there. So at ASGCT, we'll be updating data from the G&A kit 2 study. We're not providing any guidance here on patient accrual, but we have accrued more patients. I can tell you that from the last presentation at ASGCT. And we're also following durations of response in the patients we've previously presented. At ASCO we'll be presenting pre -clinical data from our KUR -503 program which is targeting GPC3 in hepatocellular carcinoma.
Kevin DeGeeter: Great. And then maybe just a housekeeping question for me. Johnson, from your last response, I would interpret the 18-month cash runway to include the proceeds from monetization. If for some reason you were not successful in future monetization, how should we think about cash runway?
Johnson Lau: I think we are working on different source of our revenues and also avenues. And we are having different approaches to ensure that we will be able to sustain to that point. And certainly, we have been conducting a lot of activities in relation to the monetization. Suffice to say, our usual approach is that we will only announce it when it's close to completion. But we would like to emphasize that we have been working on this for quite a while already. And we're hoping to update you in the next few months. And there are other sorts of approaches we can take, but certainly, we are going to use whatever approach we can to ensure that we are going to be able to have resources up to 18 months or longer.
Kevin DeGeeter: Great, thanks for taking our questions.
Johnson Lau: Thank you for your .
Operator: Thank you. Our next question is from Kennen MacKay with RBC Capital Markets. Please proceed with your question.
Kennen MacKay: I have a few questions. First, I was wondering if you could just comment on the potential to further monetize tirbanibulin and the number of territories and the territories that haven't yet been partnered out or licensed out there. And then beyond that, on the specialty Pharma business, I was wondering if you could expand a little bit on the margin for the business previously that had obviously been manufacturing or its clinical supply and had been non-profitable as a result of that. But now, without that capacity and costs, I would just like some further clarity on what those operating margins could be. Thank you.
Johnson Lau: Thank you, Kennen. I'll answer the first question. I will let Mr. Jeff Yordon to answer your second question on special Pharma margin. With regard to tirbanibulin, we collaborate with our partner Almirall for both U.S. and Europe. And we also partner in China, in Taiwan, Japan, Korea, and also Australia and Canada. So therefore, the territories that we are working on right now, is Latin America. But having said that, I think, the pickup of tirbanibulin has been going according to plan, and therefore there will be sources of upside potential with regard to that. And also that particular royalty stream, obviously, will be of value. And since we are continue to support the company, we're looking for different ways and various different approaches in terms of monetizing it, to ensure that we will be able to create source of resources for the company to go forward and to move the Cell Therapy program. I hope I answered your first question? And if so then Jeff, do you want to answer the second question?
Jeff Yordon: Yes, Johnson. Can everybody hear me?
Johnson Lau: Yes.
Jeff Yordon: All right. Kennen, thanks for the question. We're going to be introducing 10 new products in 2022. The specialty Pharma business. And several of the products will be at market formation, which is the first time we've been in a position to do that. So the margins will be much better. We anticipate the margins to be in the area of about 25% for the specialty Pharma business this year. And we also anticipate positive EBITDA.
Operator: Our next question comes from Jonathan Chang with SVB Leerink. Please proceed with your question.
Unidentified Analyst: Hi, guys. This is Wessel on for Jonathan. Just had a question on the NKT Cell Therapy platform. Wanted to ask if you had any thoughts on the recent FDA guidance regarding Cell Therapy clinical trials, and how this might apply to your strategy for the NKT Cell Therapy platform?
Johnson Lau: Dan?
Dan Lang: I would direct that question to Kurt. Kurt?
Johnson Lau: Kurt?
Kurt Gunter: If you're referring to the CAR T-cell guidance that came out from FDA today, I haven't had a chance to study it thoroughly. However, I will say I think we are pretty up-to-date with regard to -- how to design CAR NKT cell studies since we just submitted an IND recently that was allowed to proceed by the FDA. If you give me few more hours, I'll definitely read that thoroughly and be able to -- in a position to discuss it with you in more depth.
Unidentified Analyst: Great. Sounds good. Thank you. And then if I can just ask one more question on NKT cell therapies. Just curious if you guys could provide some color on your kind of perceived or anticipated differentiation versus other companies out there doing NKT based therapies.
Johnson Lau: Dan.
Dan Lang: Sure. Thank you for the question. So I believe we're the leader for developing NKT cells. We have two clinical trials ongoing right now, as you know, one in neuroblastoma for GD2 car NKT, and one in relapsed refractory lymphoma and leukemia for CD19 car NKT. Other NKT companies, as far as I know, they are not in the clinic yet. And the one that is in the clinic, I think they are pursuing a unmodified NKT cells. My understanding is that they're just taking NKT cells from donors, without doing any genetic modification like putting in the car or putting in an outfit team like we like did to make these cells more potent and persist longer. They're just infusing on modified NKT cells to; I believe multiple myeloma patients. So in that regard, we are probably a Unit two years I have the competition with regards to an NKT cell therapy in cancer treatments.
Unidentified Analyst: Thanks for taking the questions.
Johnson Lau: I also want to emphasize that mentioned press release that we also regard the industry sponsor IND for the KUR-502 allowed already. And this will allow us to expand to more centers and in a way accelerate the recruitment rate to capture the full value of our allogeneic approach for the B-cell malignancies, including lymphoma in a more expedited fashion. So therefore in highlight with regard to our commitment and our ability to work with FDA to resolve of KUR to advance our programs in Cell Therapy. I hope that this provide you some more data points for your consideration in your evaluation.
Unidentified Analyst: Perfect. Thank you so much.
Johnson Lau: Thank you.
Operator: Thank you. Our next question comes from Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.
Matt Kaplan: Hi, thanks for taking the questions. Jonathan, just wanted to follow up on that a little bit more in terms of KUR -502. How should we think about the roll out of those 12 additional sites this year and generating additional data throughout 2022, and what are your expectations in terms of increasing patient enrollment there in the ANCHOR study?
Johnson Lau: Thank you. Dan, you would answer the question?
Dan Lang: Sure. So we're very pleased that we were able to file in line. Data was recently allowed by the FDA to expand our current single center study from Baylor to a multicenter studies. As Kurt mentioned in his prepared remarks, we're looking to extend the 12 sites. We're actually kicking off those access right now, and we're hoping to have more patients that will replicate the very early promising data that we presented at last year's ASH medical conference. Currently, we're not projecting -- we're not giving any guidance on a number of patients. We are hoping that by the time that we exit the year, we'll have a pretty good idea what the recommended Phase II dose should be from a dose escalation study.
Matt Kaplan: Okay. Very good. And then -- and then follow up on the anchor at the ASTCT conference in - next month, which should we expect to see additional patient data versus ASH of last year?
Johnson Lau: Dan?
Dan Lang: Yes. So that the ASTCT meeting we're going to have just a little bit more incremental data on a couple of patients. And then we also have more mature data for those patients that had ongoing complete response or PRs. So there's a little bit of incremental information on the durability of responses, as well as incremental data on a couple more patients. But the really, the big data update will be this year at ASH. After we stand up of all these sites to enroll more patients in the ANCHOR -- we call the ANCHOR 2 study in this multi-center study.
Matt Kaplan: Okay. Great. And then last question. You've already spoken about the asset monetization plans. Can you give us a little bit more color on the cost reduction programs you've put in place? And as you as you shift your focus to the cell therapy platform, help us understand in terms of your SG&A and R&D with what were you thinking can get to?
Johnson Lau: First of all, let me, again, saying that we have under non-core asset. We're not giving any guidance. We are just emphasizing debt. We understand that this is -- We want to emphasize this is the path that we are taking. Opted due to evaluation with regard to what's the best path forward. I want to emphasize, again, that we're not actually giving any guidance, but rather, we would like to emphasize the in action. And then we will then be able to announce at the appropriate time when all these activities -- some of these activities are completed at the appropriate time. Now, with regard to cost reduction, as our CFO, Mr. Joe, and only has indicated that a lot of the activities related to our aspects or discovery already being discontinued. And then, we also reduced the oral paclitaxel activities to only two of the existing studies that will require minimal investment. And then, correspondingly, the SG&A will also come stock. The current projection is that it will be more than 50% reduction of the entire operating expenses in the next couple of months right now.
Matt Kaplan: Okay. Thank you, Johnson. That's very helpful.
Johnson Lau: Thank you. Thank you, Matt.
Operator: Our next question comes from Yale Jen with Laidlaw & Company, please proceed with your question.
Yale Jen: Good afternoon. And thanks for taking the questions. I just want to clear that, in terms of you talked about a cash flow , you have about $61 million cash by the end of last year, and when you talked about the runway, do you including the -- also include the $40 million for the Dunkirk -- the proceeds from that, as well?
Johnson Lau: Joe?
Joe Annoni: Can you hear me?
Johnson Lau: Yes.
Joe Annoni: Can you hear me okay?
Johnson Lau: Yes.
Yale Jen: I can hear you.
Joe Annoni: Okay. Good. Thanks. My phone is acting up there. But yeah, the $61 million that you're referring to, that was as of December 31st, so that does not include the proceeds from Dunkirk which occurred in January. We have not provided updated numbers as far as the cash balance, but you can infer from that -- from those 2 data points.
Yale Jen: Okay, great, that's very helpful. And the second question here is that, in terms of TCR P, does it consider us a non-core or still hard-off this Cell Therapy potentially to be pursued going forward?
Johnson Lau: Dan, do you want to address this question or do you want me to address this question?
Dan Lang: I'm happy to take it. So Yale, so as you know the TCR -T is a TCR receptor that targets the instance NY - ESO and it's an autologous T-cell approach. Currently, we have a Phase one program that is ongoing at Baylor in Dallas and this is targeting those solid tumors, including lung cancer, breast cancer, head and neck cancer, TNBC and I believe bladder cancer. They have high expressers of NY-ESO. We're hoping to get some safety and efficacy known from this study. Longer term, it's our believe that in order to drive long-term durable response in solid tumors in more appropriate approach would be an allergy Nick approach because based on our understanding of the science and literature and other companies experience, we don't believe a one-shot of how this approach is going to be efficacious enough to treat solid tumor. So long term, if we're seeing a putting interesting signal from our NY - ESO TCR. There's a possibility that we could put that TCR onto the NKT cell platform so we can provide a allogeneic approach that we can give repeat dosing. So that's sort of our long-term plan. But it's -- I hope that's helpful to you, Yale?
Yale Jen: Yes, absolutely. And maybe the last, squeezing one more question here, which is that just a housekeeping question. That based on the fourth quarter operating expenses, both in the R&D and SG&A, should we consider, that could be the new basis for the operating expenses of 2022, in general?
Johnson Lau: You should consider much lower, because when you are trying to wind down certain operations, including the marketing arm, they are really up on already. And also that we are eliminating some of the clinical operational team related to oral Paclitaxel. You should expect that the operating expenses should go sort of just down drastically, including SG&A. So therefore, your assumption should be based on a number based on the regular number, and then should tick around 50%, at least 50% reduction. That's our objective right now.
Yale Jen: Okay. Great. Thanks a lot. And best of luck for things moving forward.
Johnson Lau: Thank you for your questions, Yale.
Operator: Thank you. There are no further questions at this time. I would like to turn the floor back over to Johnson Lau for any closing comments.
Johnson Lau: Thank you very much. We are pleased to provide you with this update today, as we begin a new chapter at Athenex. We believe that our Cell Therapy programs should be the main driver for future growth, and position us to be a leader in this space. The encouraging clinical data are in strong support of the great potential of our Cell Therapy program. Our decision to monetize non-core assets, improve our balance sheet, and cut operating expenses, result in leaner structure that will meet our long-term corporate objectives and create sustainable long-term value. The combination of these initiatives set us up for value creation for shareholders. And will help us execute on our mission to bring innovative treatments to cancer patients. Thank you for everyone for joining us today.
Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
